The CEO of the New Mexico Finance Authority misled the NMFA Board in reporting on what has now been revealed to have been a fake 2011 audit. May’s misleading statement to the Board surfaced in the affidavit for search warrant executed this week on the NMFA by New Mexico Securities Division agents. While May has claimed he himself was misled about the fake audit by a former employee, his own false statements to the Board raise new questions about his conduct in this matter.

According to the affidavit, obtained by the KOB-TV news team, May’s statement on the 2011 audit came during the March 22, 2012 NMFA Board meeting.  During the Audit Committee agenda item, May “reported the State Auditor has approved the NMFA audit with zero findings.” New Mexico Watchdog has confirmed that the search warrant affidavit correctly quotes the minutes of the NMFA’s Board meeting, linked here on NMFA’s website.

May has stated that the agency’s former controller, Greg Campbell, misled him him about the status of the Auditor’s review of the audit. May says Campbell is responsible for producing the fake audit that has led to the NMFA’s current troubles. May had been alerted by the State Auditor in December 2011 that the audit was late and had not been received in the Auditor’s office. May claims Campbell informed NMFA management that the Auditor was “mistaken.” May apparently relied on that assurance to ignore the December 2011 warning from the State Auditor’s office.

On May 23, 2012, the State Auditor put NMFA on its “at risk” list because the audit had still not been received in his office.

The fake audit has put the NMFA in crisis. Investigations are being conducted by the State Auditor, who calls the situation “a fraud.” A potential criminal investigation is being conducted by the Securities Division. Funding for public works has been held back while the NMFA continues to lack an authentic audit of its 2011 financial statements.
Related report: NMFA Moves Forward On Investigations and Projects, But Big-Ticket Items Still in Limbo

It has not been explained why May was relying exclusively on Campbell’s say-so to conclude that the Auditor was mistaken. There were other executives inside NMFA who normally would have been involved in the audit process, including May himself.

May’s statement to the NMFA Board at its March meeting causes additional problems for the embattled CEO. Not only was it untrue that the State Auditor had approved a 2011 audit, May’s representation that the audit had been approved with “no findings” is not supported by even the fake 2011 audit.  During May’s time at NMFA, no audit has been released with no findings of errors or shortcomings at the agency.

The fake 2011 audit reports a negative finding from the State Auditor that the audit was substantially late, a violation of of New Mexico law. Here is a reproduction of the relevant page in the fake 2011 audit:

As has been previously reported here and by James Monteleone of The Albuquerque Journal, the fake 2011 audit was merely a reproduction of the legitimate 2010 audit with dates changed.

Two possibilities perhaps explain May’s misrepresentation to the NMFA Board:

1.  He never read the fake 2011 audit before reporting its contents to the NMFA Board. In that case, he was derelict in his duties as NMFA’s CEO.  May, though, insists he and others at the agency read the fake audit “many times.”

or,

2.  May intentionally or negligently misled the NMFA Board.   As we were first to report, NMFA’s audit had also been late for the fiscal years 2009 and 2010.  Campbell, incidentally, became controller right about the time NMFA’s problems with the audit deadline arose.  NMFA pledged in each of those audits to take action to prevent a recurrence of failure to meet the Auditor’s deadline.

New Mexico Watchdog has not been able to reach Mr. May for comment.

Here is video by Rob Nikolewski from Capitol Report of Rick May explaining his view on the mess at the NMFA.